Some Employees Are Furious At Management Payouts In Walmart's Big Adtech Acquisitionhttp://www.businessinsider.com/adchemy-stock-payouts-in-walmartlabs-acquisition-2014-5/comments
en-usWed, 31 Dec 1969 19:00:00 -0500Tue, 26 Sep 2017 18:13:11 -0400Jim Edwardshttp://www.businessinsider.com/c/53867b216bb3f71e4d4975ffDaniel KiepferWed, 28 May 2014 20:11:13 -0400http://www.businessinsider.com/c/53867b216bb3f71e4d4975ff
Two things also not mentioned here so far. Senior managers often get payouts as part of a deal to a) make sure things go smoothly during negotiations and diligence, and b) to ensure they stay with the company after it's been acquired. The value to the acquirer is as an ongoing operating company, so they want to make sure to protect that value by ensuring the senior management team doesn't leave en masse.
Now, I guess I would also be annoyed if my company got acquired and I wasn't one of the lucky few who got a big payout. But then again, I'm also annoyed when I bet on red and the ball lands on black, or when I don't win the lottery. Let's not confuse "annoyance" for "being right". And to those employees who are annoyed that their common stock suddenly wasn't worth anything? It wasn't worth anything before Walmart came along, either. But hey, at least your salary got paid by some investors in the meantime.http://www.businessinsider.com/c/538653aa69bedd4367ca8953Sam C.Wed, 28 May 2014 17:22:50 -0400http://www.businessinsider.com/c/538653aa69bedd4367ca8953
I am not shocked at all by this. It is Walmart. Not only are they grossly shady and out for themselves, they don't know how to recognize great tech talent when they see it. They have made 10-12 acquisitions in 18mos and how many of these people are left, hardly any.... they bounce when they realize what a joke that place is. Plus, the leaders who are awsome have left and gone to Google, Groupon and other places and what is left is exEbay, exYahoo guys with no track record of success and no credits to their name. Walmart will always sell sh*t but they will never be a tech or eCommerce company and this is a clear sign of that. So unfortunate for the acquired talent but there is hope as you are in the Silicon Valley and your opportunities are endless.http://www.businessinsider.com/c/5385ec59ecad04863313aa53MHourbackWed, 28 May 2014 10:02:01 -0400http://www.businessinsider.com/c/5385ec59ecad04863313aa53
Another question here is, if Adchemy is really the "train wreck" described by Antonio Garcia-Martinez, what exactly did Walmart get for its >$30-40MM?http://www.businessinsider.com/c/53857b57eab8ea34526cd61edlmcdonoughWed, 28 May 2014 01:59:51 -0400http://www.businessinsider.com/c/53857b57eab8ea34526cd61e
"The situation is somewhat unusual because normally in tech startups employees are granted options on common stock for free....It's used as an employee retention incentive.. at no stage is a worker asked to risk their own money."
Wow....OK: That is totally wrong...On BI? Come on...options, as a functions of securities law, bear a strike price that is equal to fair market value...so if you are an employee who joins after the company takes money, (which = most employees), then the strike price is typically at least the price paid by investors in the last financing...Employees take no risk only if they remain employees until the company sells or goes public...but that takes 3, 5, 10 years or more...and if you are fired or you quit before that happens, then you are typically forced by the terms of your option agreement to decide whether or not to pay the strike price for vested shares, or lose the "option" to buy them forever. This is not "unusual." It is typical.
Furthermore, it sounds like Adchemey sold for far less than the $120M they took; (even if the "$30-$40M" estimate is low, as Wal Mart says). How would the common share-owning employees like to trade places with the investors? The ones who lost $75-$100M in this deal? Those investors would have had to approve the terms of the sale, including the payouts to management...cash investors do not agree to large payouts for managers, while they take huge losses, out of some arbitrary affinity for managers...They probably agreed to it because the deal would not have gotten done at all unless senior management agreed...and the senior managers insisted on getting paid, or they would go on trying to make the company work...and so the investors agreed to these payouts as a means of recovering part of their investment, rather than take the risk of the company going to zero in the hands of managers that had so far driven the company off a cliff.
If employees bought options, while still employees, for no reason, then shame on management for not explaining to them that they did not have to do that...if that happened , then these managers are complete tools...but it is not clear that happened to anyone in this case, (and I suspect it did not). But even if it did: Then even more shame on you employees for not reading your option agreements. You likely have college educations...You have unusual access to professors and friends and lawyers, and friends of friends, who know about start-up option agreements...and even if you do not, this aspect of your option agreements is not shrouded in legal mumbo-jumbo...it is plain english, for the most part, and if you don't understand what it says, then ask before you sign...or ask later, after you sign, but before you spend thousands of dollars to buy something you do not comprehend...